Indonesia hopes to minimize wealth gap through tourism
Indonesia continues to push for investments that spur quality growth in a bid to distribute income more equally through various sectors, including tourism.
Investment Coordinating Board (BKPM) head Thomas Lembong said the government does not believe in a trickle-down effect — where one builds a country’s economy through jacking up investments in any sector — and does not worry about welfare distribution itself.
“I believe that we have to build a just and equitable society from the very beginning […] China’s economic miracle is its success in raising hundreds of millions of people from poverty, not in making a few million people ultrarich,” he said at the Bloomberg Live ”The Year Ahead Asia” summit on Wednesday.
Indonesia’s Gini ratio — a measure of inequality in which zero represents complete equality and one inequality — has continued to improve over the years and was at 0.394 in September 2016 from 0.41 in 2012, according to data from the World Bank and the Central Statistics Agency (BPS).
The government aims to further reduce it to 0.36 in 2019, still higher than 0.32 recorded in 1999.
President Joko “Jokowi” Widodo highlighted tourism as one the sectors in which investments would contribute to such fairly distributed growth as the industry requires many skilled workers across the country.
BKPM data showed that investment in tourism has grown by 37 percent year-on-year (yoy) to Rp 12.4 trillion (US$916.6 million) in the first half of this year. Meanwhile, the average growth of investment in the sector stood at 17 percent in the 2012 to 2016 period.
Jokowi said now was a “golden chance” due to the tourism boom amid the emerging middle-income class in the Asia-Pacific region.
“The continuing rise of hundreds of millions of people in China, in India and the rest of the Asia-Pacific into the global middle class is leading to a tourism boom. But the tourism boom would pass Indonesia by if we are not ready with our infrastructure,” he said at the same event.
Indonesia is revamping 10 “new Bali” destinations across the islands until 2019 to attract more tourists. It aims to welcome 20 million foreign visitors by then.
Therefore, infrastructure, which includes upgrading airports in main destination areas, will continue.
HAS Hanandjoeddin Airport on Belitung Island as well as Komodo Airport in Labuan Bajo in West Nusa Tenggara (NTB) will soon get international airport status, allowing them to have more international routes.
Having an international airport with direct flights, Jokowi continued, was essential to increase the number of tourists. Manado in North Sulawesi, for example, saw the number of Chinese tourists leap from 12,000 per year to 12,000 per month as several airlines opened direct flights to and from China.
The World Bank has suggested the government improve their local service delivery, strengthen social protection programs (such as cash transfers and education subsidies), promote skills training opportunities for the workforce and use taxes and government spending to reduce inequality.